By Harry Mottram: following Friday’s collapse of the Silicon Valley Bank and it’s propping up with help from the US Government and the acquisition of its UK version by HSBC for £1 today there is something approaching panic in the markets.

First Republic Bank has seen their shares down 73% today (Monday, 13th March) and has had to secure support from JPMorgan Chase & Co and the U.S. Federal Reserve to prevent a run on the bank and certain collapse. 

The President of the United States joe Biden attempted to calm markets the freefall has continued as Wells Fargo, Citigroup and Bank of Amercia saw major falls in share price as investors withdrew funds. On Sunday America’s Signature Bank collapsed triggering further sell offs from the smaller banks.

Ian Carrotte of ICSM said there were ‘echoes of 2008’s Credit Crunch’ which began with a small bank in America running out of cash due to the sub-prime mortgage scandal. “This time it’s about banks and lenders in the USA that don’t have enough cash to withstand interest rate hikes and doublt digit inflation,” he said, “the main fear is the contagion will spread to the UK and Europe – which potentially will hit the economy and businesses as a result.”

HSBC have acquired the insolvent Silicon Valley Bank (SVB) for £1 after a frantic weekend of negotiations that saw potentially a massive hole blown in the UK economy as hundreds of firms collapsed after losing all their banking reserves. Chancellor Jeremy Hunt said he was in talks with the USA authorities, the Bank of England, the Prime Minister and the banks over the last two days after SVB collapsed.

The rescue plan means UK customers can access their accounts, pay their staff this week and pay their bills as their suppliers creating a collective sigh of relief amongst venture-backed technology and healthcare companies who make up most of SVB’s clients. Guestimates suggested that 50,000 people plus countless suppliers would have been hit in SVB in the UK had gone to the wall which would have spread contagion into the economy.

It is uncertain if the market will stabilise as Deutsche Bank’s George Saravelos said the German giant was now expecting a rate cut in the USA and a recession – that’s already rung alarm bells. The FTSE is 2.5% down today while the FTSE 350 banking sector fell by around 5% by late afternoon, driving all of the UK’s high street banks to see their value fall in single figures. 

Ian Carrotte said: “Let us wait and see – it could be a case of a readjustment in market values – but if it is not then we could all be affected like in 2008.”


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ICSM, The Exchange, Express Park, Bristol Road, Bridgwater, Somerset TA6 4RR. Tel: 0844 854 1850.